A Fresh Look at ServiceNow (NOW) Valuation After Recent Sideways Share Performance

ServiceNow (NOW) shares have mostly drifted sideways this month, holding around $912 per share. The company’s performance over the past 3 months has been mixed, which raises some questions about where things might head next for investors.

See our latest analysis for ServiceNow.

While ServiceNow's share price dipped slightly over the past quarter, the bigger picture suggests a cooling of momentum after a strong multi-year run. Although the 1-year total shareholder return is essentially flat, long-term holders are still up meaningfully, with the 3-year and 5-year total shareholder returns both well in positive territory. That history keeps optimism alive, but recent sideways moves hint at shifting growth expectations or evolving risk outlooks for investors.

If you're wondering what else is showing staying power or building momentum, now is a great moment to broaden your search and discover See the full list for free.

With ServiceNow’s shares consolidating after years of strong gains, the core question remains: Is this a rare moment to buy in at reasonable value, or is the market accurately reflecting all future growth ahead?

Most Popular Narrative: 20.1% Undervalued

ServiceNow's prevailing narrative points to a fair value well above the recent $912 close, signaling the market has not fully priced in expected growth. The stage is set for a compelling story driven by expansion, AI, and big assumptions about future margins.

ServiceNow's focus on AI platform and business transformation is gaining momentum, which is expected to drive future revenue growth as demand for AI-driven solutions increases. The acquisition of companies like Moveworks and Logik.ai can enhance ServiceNow’s offerings, potentially improving net margins by driving efficiencies and offering more integrated solutions.

Read the complete narrative.

Curious what is fueling that bullish target? Analysts are betting on a rare mix of massive earnings, sharply higher margins, and ambitious integration of new technology. Want to see which wild financial forecasts justify that premium? Discover the key assumptions powering this valuation and why they matter now.

Result: Fair Value of $1,142.59 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ServiceNow’s reliance on U.S. federal contracts and the challenges of integrating new AI acquisitions could threaten the bullish outlook if conditions shift.

Find out about the key risks to this ServiceNow narrative.

Another View: Multiples Highlight Steep Valuation

Looking at ServiceNow’s current P/E ratio, the numbers tell a story that challenges the optimism of growth-focused forecasts. The stock trades at about 114x earnings, which is well above both the US Software industry average of 35.7x and its peer group’s 61.7x, and sits well above the market’s fair ratio of 50.1x. This kind of gap means investors are betting on much bigger profits ahead, raising the stakes if expectations fall short.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own ServiceNow Narrative

If you think the story goes a different way or want to dive deeper into the numbers yourself, you can build your own perspective in just a few minutes, discovering insights first-hand. Do it your way

A great starting point for your ServiceNow research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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